Don't count on industry to save manufacturing

There are calls for an inquiry into the Australian manufacturing sector, but a glaring problem is being ignored: without long-term investment in research infrastructure there won't be anything to manufacture, argues Michael Biercuk.

Green light: long-term vision and investment in research infrastructure are needed for innovation. (Source: iStockphoto)

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There is tremendous intrinsic value in an economy based on actually producing things — we should not be tempted by the economic Siren's song of flocking to provision of online services. But the future of Australia's manufacturing industry relies on us developing new things to manufacture.

To do this we must collectively leverage new promising technologies in areas such as biotechnology, green technology, nanoscience, and quantum science. Many exciting ideas already exist, but we require significant up-front investment in research infrastructure and long-term vision in order to turn ideas into real products.

In the past, the biggest proponents of this approach were industrial giants; major research infrastructure was housed in industrial research labs, and as a result many of the most significant technological innovations of the 20th century emerged from industry. This includes both the transistor and the laser, keystone technologies in the modern information age.

Organisations like Bell Labs in the United States took a long-term view and invested in research infrastructure at great short-term expense. They supported efforts in experimental physics, materials science, optics, mathematics, and computer science with the expectation that they would develop the marketable high-tech products themselves. This was smart investing — they reaped financial rewards for decades.

Simply put, investment in research infrastructure led to new manufacturing capabilities that revolutionised the world. So why can't this happen again?

Investing in innovation

During the postwar heyday of industrial research, from the 1940s-1970s, the most innovative industrial organisations existed in near-monopolistic or oligopolistic sectors such as telecommunications and defence. Large organisations with limited competition were able to make long-term capital investments in experimental research infrastructure.

Today, many of these industries have become fractured, the dominant industrial houses are largely gone, and the research wings of the remaining organisations are greatly diminished. For a variety of economic reasons, it has become unattractive for industrial organisations to make the necessary long-term investments in in-house research capabilities. Sadly, even Bell Labs is now largely defunct following major changes in the US telecom industry.

The IT sector now dominates global industry. While the software giants of the world do support some in-house research, the competitive marketplace means that they tend to focus on areas closely tied to their core businesses. Other players who have historically focused on computing hardware retain active physical science research initiatives, but they face increasing fiscal pressures and researchers need to solicit a growing share of research support from external sources such as government funding bodies. Continued changes in the business models of these companies may be a negative portend for the remnants of industrial research in this sector.

Tech startups in garages are no better. The next generation of high-tech innovation simply will not be like the dotcom sector where a book on UNIX or Java and an internet connection can produce the next big commercial phenomenon. As we've seen, the key to driving future innovation is investing in research infrastructure, and that's just too expensive for a small company.

To understand the scope of infrastructure investment needed, let's take a concrete example. Nanoscience, for instance, shows some of the greatest promise for innovation. But it costs millions to set up a nanoscience research facility — measurement equipment alone can cost upwards of $50,000 per item, with dozens of such instruments needed in a single lab and ten or more collaborating labs in a strong research organisation. Characterisation and fabrication equipment in "cleanroom" environments can cost tens of millions, and require specially trained staff. Even the buildings themselves need to be specialised — purpose built for research.

The economic changes of recent years and the extraordinary costs of building research infrastructure force us to look for other opportunities.

The most promising incubator of research we have left is the academic sector, coupled with appropriate levels of public-sector support and industrial partnerships. Universities, in Australia and abroad, are nearly unique in that they are both capable and content to make the requisite infrastructure investments with the primary aim of expanding knowledge — not generating returns for shareholders.

How we efficiently translate scientific breakthroughs in university labs into marketable products is a difficult policy question that remains under development at the level of universities, states, and federal governments. However, we have to try, because without the will or the ability to support the necessary research infrastructure, neither large companies nor small businesses are likely to meaningfully contribute to technological innovations in many of the most exciting areas of science today.

We must fill this innovation gap, or there won't be much of anything to manufacture tomorrow.

About the author Dr Michael J. Biercuk is an experimental physicist and the primary investigator in the Quantum Control Laboratory at the University of Sydney. His specialties include quantum control in atomic systems, dynamical error suppression, nanoelectronics, and precision metrology.